Schools to raise taxes, cut 450 jobs

City homeowners to face maximum hike for 5th year

June 10, 2003|By Lori Olszewski, Tribune staff reporter.

Though school districts across the nation are struggling financially or laying off teachers, Chicago Public Schools chief Arne Duncan unveiled a tentative $4.8 billion budget Monday that increases school spending and property taxes.

The tax increase should generate about $36 million and add $9 per $100,000 in assessed valuation to property owners' annual bills, according to John Maiorca, director of the schools Office of Management and Budget.

It is the fifth year in a row Chicago has sought the maximum property tax increase allowed under the law. Last year's property tax increase was more--$20 per $100,000 in assessed value--because the tax cap is tied to inflation and it was higher last year.

The school district has proposed cutbacks, including the elimination of 450 jobs--300 on its payroll and another 150 janitors who work for private firms that clean the schools. Duncan and his team, however, have chosen to redirect the $35 million in savings from the job cuts and additional efficiencies into other areas.

The net effect is that the school district will have about the same number of employees--47,319--next year as compared with this year along with a 4.5 percent or $209 million increase in spending.

Duncan said the increased spending is necessary to fund a number of initiatives that will directly benefit students. They include: 1,350 new slots for children in pre-kindergarten programs and more help for teachers to improve math, science and reading instruction. The school district also will add summer programs for students who need extra help and classrooms for students in overcrowded schools on the Southwest and Northwest Sides.

Duncan said he is pleased to be adding services at a time when some local districts, such as Elgin, are laying off teachers and other states, such as Oregon and Colorado, are cutting back the length of their school years.

Chicago is expecting a $70 million increase in state revenue. The boost is expected even after the school district makes a $65 million payment to the Chicago teachers' pension fund that is usually paid by the state, Maiorca said.

Still, the increased school spending is drawing criticism from some quarters.

Laurence Msall, president of the Civic Federation in Chicago, said he was disappointed the school system was pursuing another tax increase during these challenging economic times.

"They need to follow the example of other city departments and reduce their overall payroll, especially since they added more than 100 positions last year," Msall said.

Instead, Duncan said he plans to create two new departments: an Office of Principal Development and the Office of Postsecondary Education, which will work to get more Chicago students admitted into prestigious universities. The school district also plans to spend $22 million to create a central, computerized student records system that would replace a paper-driven system that often does not follow students when they transfer schools.

Also hidden in the numbers is the price of labor peace because the teacher contract expires June 30. The district and the Chicago Teachers Union recently began negotiations.

Duncan declined to name the minimum teacher raise planned for in the budget, saying, "We are not negotiating through the press."

Though Duncan would not comment on the size of a possible teacher salary increase, every 1 percent raise granted the teachers would equal an additional $15 million a year, Maiorca said.

A combination of sources will be used to pay for the spending boost. They include the $35 million in savings, the $36 million property tax increase, the $70 million in additional state revenue and a dip into the school's reserve or emergency cushion.

In a significant development, the school system plans to spend $48 million of the $210 million reserve it expects to have left at the end of the 2002-03 fiscal year at the end of this month.

The $4.8 billion total includes a $3.8 billion operating fund that is used to pay most salaries and most expenses, $687 million capital fund for school construction, renovations and repairs, and a $290 million debt service fund to pay off borrowed money.

A detailed capital budget showing what construction projects will be funded next year is to be released later this month--before the Board of Education is scheduled to vote on the overall budget on June 26.

The budget document said about $212 million of next year's capital budget is money carried over from previous fiscal years. Of the other $474.8 million in new construction money, $220 million will be financed with a bond issue, which is money Chicago taxpayers will have to pay back in coming years.

The bulk of Chicago's mammoth school construction program since Mayor Richard Daley took over the schools in 1995 has been financed by local property taxpayers.